IAIN WRIGHT: BHS is unacceptable face of capitalism
The Hartlepool branch of BHS closed last Saturday. This Saturday, another 30 or so BHS stores up and down the country will shut their doors for the last time. Any other remaining stores will close for good by 20 August, and a British high street institution, lasting almost 90 years, will come to an end.
We in Parliament have been looking at this sorry and tragic tale. The Business Select Committee, which I chair, and the Work and Pensions Committee, chaired by Frank Field, came together to look at the sale and acquisition of BHS, starting from when Sir Philip Green bought the company in 2000, to when he sold it to Dominic Chappell for a pound last year, and how it went into administration 13 months later. We published our report on BHS on Monday.
The end of BHS created some winners and many losers. The losers, the people I feel most sorry for, are the 11,000 people who worked for BHS and who have either lost their jobs already or face doing so in the next few weeks, and the 22,000 pensioners in the BHS pension scheme, who face significant reductions to their pension entitlements.
There are a few winners. At a time when thousands of BHS workers were losing their jobs, Sir Philip Green was taking delivery of his third yacht, worth about £100 million. He and his family extracted hundreds of millions of pounds from BHS in the form of dividends and complicated and murky sale and leaseback arrangements, channeled through off-shore companies. He failed to invest sufficiently in the shops to keep them competitive in the modern high street, and he failed to contribute enough to the pension scheme, which moved from a surplus to a deficit of over half a billion pounds.
Sir Philip Green sold BHS to Dominic Chappell for a pound. Mr Chappell had been made bankrupt twice, had no experience of retail and was no more capable of running a bath than he was of running a multi-million pound business. This was obvious at the time, and yet it still went ahead. It did so because Sir Philip bulldozed the sale through, without a proper challenge from his board of directors.
Dominic Chappell put no money into the venture and crashed the company following the course set by Sir Philip. Despite putting no money in and seeing the company fail, he managed to take out about £2.6 million from his 13 months in charge. The fact that he was such a failure was bad enough, but that he effectively had his hands in the till of BHS is a huge insult to the workers and pensioners that he let down so badly.
We on the two committees believe that Sir Philip Green needs to do the right thing as far as is possible to do so. He needs to write a very large cheque to help those pensioners who face a loss in pension entitlements.
Of course businesses succeed and fail every day. The high street is a particularly tough place to do business, especially in its competitive environment. But leadership failure and personal greed brought about the collapse of BHS. Whilst one man sits on his new £100 million yacht, tens of thousands of people will suffer and struggle. That is why we called this the unacceptable face of capitalism.